What's the potential for a boom in FTTP (fiber to the premises)? IDC's got some numbers. The research firm points out that the number of users worldwide who access broadband services via fiber connections direct to their homes or businesses is quite small and that by 2007 the number will have doubled but will still be modest.
The firm reports that in 2002, 2.9 percent of the 58 million-odd broadband connections worldwide were made via fiber, using either passive optical networks (PONs) or point-to-point links like Ethernet. In contrast, more than 97 percent of folk used cable modems, DSL, or fixed wireless to get their data.
By 2007, IDC forecasts, broadband connections will more than double, and so will fiber links: of 209 million connections, 9.9 percent, or about 20 million, will be fiber.
While 20 million is a large number, it needs to be put into context. Today, there are more than 50 million DSL users worldwide (see DSL Heads for 60M Users). So by 2007, the number of fiber subscribers will still be less than half of DSL volume in 2003.
Table 1: Fiber as Percentage of Worldwide Broadband Connections, 2002 to 2007
2002
2003
2004
2005
2006
2007
Fiber share %
2.90%
3.30%
4.10%
5.60%
7.60%
9.90%
Total broadband connections
58M
84M
114M
147M
179M
208M
Source: IDC
These figures don't assume any input from the U.S. RBOCs, according to Sterling Perrin, senior research analyst at IDC. Their plans for fiber installation are the subject of ongoing speculation. Light Reading sources, for instance, say the RFP issued this summer by BellSouth Corp. (NYSE: BLS), SBC Communications Inc. (NYSE: SBC), and Verizon Communications Inc. (NYSE: VZ) could result in fewer than 60,000 fiber connections or more than 600,000 by 2004, depending on how serious the RBOCs prove to be about fiber (see FTTP Booty Tough to Peg).
Perrin is one of the skeptics. Without a "killer application," he says, RBOCs aren't likely to be aggressive in fiber rollouts. While consumer interest in video is increasing, new compression techniques are improving the outlook for DSL. Besides, RBOCs' DSL deployments are proving successful, providing a disincentive to rip out copper that's paying the bills and replace it with fiber that may or may not.
OK, obviously HDD is a mature technology, some 50 years old. Compared to that FTTH is infant. Remember that when gigabit HDD came to the market it did cost a fortune. Also, many think that FTTH can be made much cheaper than the current market price.
gps wrote: "Thanks for the feedback. You mentioned installing gear inside the home. I understand that a utility wants AMR functionality from a FTTH solution, and therefore must install on the utility side of the meter. Consequently, outdoor installation makes sense for the munis. But, I don't fully understand why the carriers are against the indoor box."
Good question -- and you go on to make some good points. My first reaction is something along the lines of "that's the way it's always been done" or "of course it has to be outside". I will have to think about possible answers that are better than that.
For now, here are several comments: 1. AMR (automated meter reading) is not as big a driver for the munis as you think (or as big as I think it should be, but then I was an AMR advocate way before it's time). Basic AMR can be done with narrowband power line carrier or wireless. I keep telling FTTH vendors we speak with that they should be talking to AMR vendors like Itron or TWACS. I'm not sure this is happening yet.
There is some finally some movement to power the optical unit from a direct connection at the meter rather than boring a hole in the wall to run a power cord into the house to plug into the 120v system.
2. Stopping the fiber at the outside of the house simplifies the complexity and lowers the cost of hooking up the subscriber. Rewiring a home is expensive -- you don't want to make it a precondition for getting FTTH subscribers.
3. Power, cable TV and telephone service all run to the same locations on the side of most houses. The codes encourage this for proper grounding; you don't want the 3 different services to use different grounds. As a result, if I put my optical unit there, voice and video are plug and play with the existing wiring. That leaves just Cat 5 wiring for data.
I keep telling FTTH vendors they should offer as an option a Wi-Fi module for their boxes to eliminate the Cat 5 requirement if a homeowner wants to pay a little extra. They all nod politely but I haven't seen any movement (I guess they're working on Verizon's request list ahead of mine -- I wonder why?)
4. For a number of reasons, it's good to have a demarcation point where the cable on one side is the customer's responsibility; on the other side, the utility's. For copper twisted pairs, such a demarc point has been required by law for about 2 decades.
5. Outside location allows utility access without a homeowner having to open up the house.
Thanks for the feedback. You mentioned installing gear inside the home. I understand that a utility wants AMR functionality from a FTTH solution, and therefore must install on the utility side of the meter. Consequently, outdoor installation makes sense for the munis. But, I don't fully understand why the carriers are against the indoor box. After all:
1. Greenfield deployments are beginning to adhere to ANSI-570A (Residential cabling standard). This easily accomodates bringing the subscriber unit indoors. 2. Indoor installation eliminates a lot of the powering issues. 3. Indoor installation saves money by eliminating the need for hardened gear. 4. Putting subscriber units indoors is already an accepted practice. I have cable modem, and it sits right on my desk. The Japanese FTTH subscriber unit looks about the same (only it often runs into a cheap residential wireless LAN). 5. I think carrier's in Japan lease their subscriber unit to the customer (kind of like I "lease" my cable modem). Thus, if I spill a drink on it, that's my problem.
Seems like the telco's are surrendering a cost advantage to the catv guys by insisting on this hardened box on the side of the home. Even if it makes sense for residential, it certainly doesn't make sense for business customers.
"But consumers love HD, and are buying HD sets faster than anyone thought they would."
Look, the hassle of driving to Candlestick Park in heavy traffic to sit on a cold (and by now nearly worn out) seat on a summer's afternoon in SF in the upper reserve (nose bleed) section and come home hypothermic for $125/person is crap.
I love tailgating as much as the next guy, but I can do the same thing in my backyard, on my full sized grill, with all the guys, and beer doesn't cost $5 each and...
DWDM2, your grouping of cable and DSL together is not the smartest thing I've seen on these boards. It shows either ignorance or emotional attachment to a specific industry, not an intellectual understanding of the market.
But I do agree with the main point that I think you are making - that DSL is not up to the task.
Compression enables DSL to fill a niche, providing some consumers with adequate quality. But this will be a very, very small niche. Why? Look at where the market is going when there is real video competition:
Cable is scared to death of satellite taking any more of their subs. They have deployed cable modems, which are kicking butt on DSL. The numbers speak for themselves. This is not a video play, obviously, but the point is that when it comes to broadcast satellite, the traditional video portion can be done as good or better than cable TV, and the consumers have and are speaking with their pocketbooks. Thus modems are being deployed to bundle services satellite cannot offer.
Since many subs do not want modems, this strategy has not been enough to stem the tide of satellite subs. Thus cable has gone hard after VOD. This is high bandwidth for a cable system, and has driven innovation with the deployment of increasingly sophisticated DWDM systems by cable in the metro. Cable operators are routinely deploying 16 channel dwdm systems, and in some areas going up to 32 channels. (This is, interestingly, far more than any other metro player is using). Where else, I ask, will you find that many operating dwdm channels?
This is, still, not yet enough for cable. VOD is also a niche play generating good revenue, (though a decent sized niche), as many subs don't use it or care.
So cable is adding one more arrow into their quiver - High Definition (HD) TV. Broadcasters whined for and got additional spectrum to do HD, but have been very very slow to deploy. Funny thing, cable is now driving HD deployment, and leading the way, even though they originally thought everything they would do was just to keep up with their ability to carry all local channels, which they knew eventually would all shift to digital and HD. But consumers love HD, and are buying HD sets faster than anyone thought they would.
Now, with this view of the complete picture of real video services making real money (not the delusions of some on the sidelines), what makes anyone think DSL can make ANY kind of play in video? It just does not make any sense.
RBOCs have capitulated the local loop by taking the short term dead end of DSL. Optical technologies (FTTH, PON, FTTC) existed 15 years ago that would have enabled RBOCs to be competing with cable now on all these new revenue streams. They could, by now, have meaningful penetrations of advanced fiber-fed digital services, just like the fiber rich cable TV topologies in use today. They could have been deploying these technologies, but elected not to. To say that cost was the factor is to be blind to the facts, as cable acquisitions typically go for well above $2000 per sub (typically 3000 and more now), which was enough money to deploy FTTH 15 years ago! Granted, they'd need good penetrations to do it, but then cable's penetratins would have been reduced as they took market share, and by now they would probably be even on market share and thus dealing with roughly the same cost basis.
Every day, fiber penetration goes deeper in cable TV, looking more like FTTP all the time.
There is so much money to be made with HDTV, HSD, VOD, and broadcast video, it is quite hard to understand why they have so completely given up the residential marketplace.
I honestly think that if they gave it their best shot, found the money, and started building FTTP as fast as they could, that they would have a chance still to make it in the residential market. But there are simply no signs that they understand what is happening in this market. To catch up now will take a herculean effort, with superb marketing. The RFP could be a start, but the numbers they are projecting are too little, too late.
They still don't get it. But then, who is surprised about that?
Optics vendors take heart, optics in the local loop are being deployed seriously by cable as we speak. And FTTP vendors, your best bet is to go after other markets than the US. It is not too late, but the sun is certainly close to setting on RBOCs in the residential market.
"In any event, I agree with your final conclusion that compression is only a temporary solution. But it's only a partial, temporary, solution at that. It doesn't do much for data types that don't tolerate compression loss. For those data types, higher bandwidth is the only solution."
Absolutely.
BTW, can you explain what is a lossy compression and how it applies to Internet data? Thanks.
"While consumer interest in video is increasing, new compression techniques are improving the outlook for DSL."
This is predominantly for video and voice, and lossy compression. The ultra-high compression ratios are only applicable for lossy compression. Every other type of data is intolerant of compression loss, and the compression ratios are much lower for lossless compression algorithms.
re:"I remember a program called Stacker was very popular; it could compress to any proportions like 100:1."
Stacker was lossless compression, since it was applied to "data." It was actually no where near 100:1. It used to be referred to as a "disk doubler." Stacker version 3.0 told users to expect on average a 3:1 compression, though most users generally got less than that.
In any event, I agree with your final conclusion that compression is only a temporary solution. But it's only a partial, temporary, solution at that. It doesn't do much for data types that don't tolerate compression loss. For those data types, higher bandwidth is the only solution.
re: "Japan has some of the highest housing densities of anywhere in the world... This density translates directly to a much lower cost/home to build."
The irony is that one of (single mode) fiber's greatest advantages is its ability to transport huge data rates at huge distances...unless of course you ruin the fiber's inherent "future proof" property by using TDMA PON and send the signal through a PON splitter that adds the equivalent of about 50km of loss.
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